When Does It Make Sense to File Early for Social Security Benefits?

When should you file for Social Security? It’s a question that every retiree faces. You can file anytime from age 62 to 70. However, age 62 is by far the most popular age for filing. More than 34 percent of all recipients file as soon as they’re eligible.1

However, as you may know, there’s a cost to filing early. If you file before your full retirement age (FRA), your benefit could be reduced as much as 35 percent. The closer you are to your FRA when you file, the lower the reduction. These reductions are permanent, however, so they can have a big impact on your financial stability in retirement.

Does that mean filing early is always the wrong move? Not necessarily. Your decision on when to file should be based on your unique situation, and there could be certain situations in which an early filing is appropriate. Below are three such situations. You may also want to consult with a financial professional to help you chart a strategy that aligns with your needs and objectives.

Scenario #1: You have no other income options.

Clearly, if you’re eligible for Social Security and have no other options for income, you may want to consider filing early. It’s possible that you may have to end your career before you’re ready. For instance, you might suffer a disability that limits your ability to work. Or you might be laid off and have difficulty finding work.

Before you file, however, be certain that you won’t go back to work. Social Security may reduce your benefits if you file early and then go back to work before you reach your FRA. That means you could see a reduction not only for filing early but also for earning additional income.

Scenario #2: You’re not worried about the benefit amount.

Yes, you can get a higher benefit by waiting until your FRA or even beyond to file. However, it may be possible that you aren’t concerned with the increased benefit. Maybe you will have significant retirement income from a pension, secure investments or other sources. Perhaps the increased Social Security benefit won’t have much impact on your lifestyle or financial stability.

If so, it may make sense to file early. By filing at age 62 you get a few extra years of benefits, which may help you reduce distributions from your savings. That could help you increase your savings and provide greater financial stability in the future.

Scenario #3: You don’t think you’ll live long in retirement.

It may not be pleasant to think about your own death, but life expectancy is an important part of retirement planning. That’s especially true when it comes to Social Security strategy. If you have reason to believe you won’t live late into retirement, it may make sense to file early. After all, there’s no point in getting an increased benefit at age 70 if you will only receive it for a few years.

Perhaps you have a chronic health condition that’s likely to limit your life expectancy. Maybe you’ve been told by a doctor that you have some health issues that may reduce your life span. However, don’t base this projection solely on family history. Medical technology has advanced significantly. Just because your parents or grandparents passed away early in retirement doesn’t mean the same will be true for you.

Not sure if you should file early, at full retirement age, or later? Contact us today for a free initial strategy session with one of our Social Security planning experts. We can help you to analyze your needs and implement a plan that will best suit your particular needs and goals.

This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

The material is not intended to be legal or tax advice. Clients should seek guidance from the Social Security Administration or a trained professional in Social Security strategies regarding their particular situation. A financial professional may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov.

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